Page 71 - World Airnews Magazine April 2020 Edition

NEWS DIGITAL

CORONA VIRUS DEEPER REVENUE HIT FROM
LATEST UPDATE
COVID-19

IATA thanks governments for support but more is needed

fast”.
he International Air Transport Association has updated its Governments have the capacity to put in place, direct financial
T analysis of the revenue impact of the COVID-19 pandemic on support; Loans, loan guarantees and support for the corporate
the global air transport industry and now estimates that industry bond market by the Government or Central Banks, and Tax relief.
passenger revenues could plummet (US) $252 billion or 44% below
2019’s figure. This is in a scenario in which severe travel restric- SPEED IS OF THE ESSENCE
tions last for up to three months, followed by a gradual economic De Juniac cited examples of state support:
recovery later this year.
“The airline industry faces its gravest crisis. Within a matter of a • Australia has announced an A$715 million (US$430 million)
few weeks, our previous worst case scenario is looking better than aid package comprising refunds and forward waivers on
our latest estimates. But without immediate government relief fuel taxes, and domestic air navigation and regional aviation
measures, there will not be an industry left standing. Airlines need security charges.
(US) $200 billion in liquidity support simply to make it through. • Brazil is allowing airlines to postpone payments of air
Some governments have already stepped forward, but many navigation and airport fees.
more need to follow suit,” said IATA’s director general and CEO • China has introduced a number of measures, including
Alexandre de Juniac. reductions in landing, parking and air navigation charges as
De Juniac said, “On March 5th we thought that the pessimistic well as subsidies for airlines that continued to mount flights
scenario was a revenue loss of (US) $113 billion. That was based to the country.
on a wide spreading of COVID-19, but not as severe as the current
blanket of travel restrictions. If this lasts for a three-month period, • Hong Kong Airport Authority (HKAA), with government
we see a 38% fall in global demand and a (US) $252 billion loss of support, is providing a total relief package valued at HK$1.6
passenger revenue - 44% down on 2019. billion (US$206 million) for the airport community including
“Where international passenger traffic is allowed, we are mostly waivers on airport and air navigation fees and charges, and
repatriating people to their home countries as governments certain licensing fees, rent reductions for aviation services
providers and other measures.
permit. And we are also delivering vital goods - medicines and
equipment to fight the virus or the most time-sensitive products • New Zealand’s government will open a NZ$900 million
feeding global supply chains. (US$580 million) loan facility to the national carrier as
well as an additional NZ$600 million relief package for the
“IATA has been asking governments to provide a lifeline of aviation sector.
financial support. A liquidity crisis is coming at full speed. Revenues • Norway’s government is providing a conditional state
have fallen off a cliff. And no amount of cost cutting can save the loan-guarantee for its aviation industry totalling NKr6 billion
day if no cash is coming in the door. Without financial relief airlines (US$533 million).
will go bust. And that could happen en masse.
Some commentators say, “so what?” I ask them to think of the • Qatar’s Minister of Finance has issued a statement of
consequences. Letting this industry fail will have an impact far support for the national carrier.
beyond the livelihoods of the 2.7 million people airlines employ. • Singapore has undertaken relief measures valued at S$112
And it will go beyond the 65 million other jobs in the value chain. If million (US$82 million) including rebates on airport charges,
we don’t have a viable aviation industry when we come out of this assistance to ground handling agents, and rental rebates at
crisis -whenever that may be- re-starting the global economy will Changi Airport.
be severely constrained in almost all sectors. And everybody will • Sweden and Denmark announced $300m in state loan
suffer much longer than necessary. guarantees for the national carrier.
Fortunately, many governments understand the critical role
of aviation. Among countries committing to financial relief are In addition to this support, the European Central Bank, and the
Singapore, China, Hong Kong, Australia, Brazil, New Zealand, Qatar, United States Congress are expected to enact significant measures
Colombia, Sweden and Denmark, Norway, and Finland. Several to aid the airline industry in their respective jurisdictions as part of
other governments are in the consideration stage - including a (US) large packages of broader economic measures.
$58 billion package in the US and significant support measures “This shows that states around the globe recognize the critical
from the European Central Bank. role that aviation plays in the modern world. But many others have
“My message to governments that have taken up this cause is still to act to preserve the important role of this sector. Airlines
to say thank you for leading. And keep watching the situation as it are an economic and employment engine. This is demonstrated
develops because we may need you to do more. My message to even as passenger operations shrink, as airlines continue to
governments that are considering doing something is to hurry-up. deliver cargo that is keeping the economy going and getting relief
Every day matters,” said de Juniac. supplies where they are needed most. The ability for airlines to
“For all the others, the potential for a (US) $252 billion fall in be a catalyst for economic activity will be vital in repairing the
revenues is an alarm bell. This is apocalypse now and you must act economic and social damage that COVID-19 is now causing,” said
de Juniac. Q

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